What is actually needed from a small business?

[peteoc]

Hi,

I'm trying to collate a list of items that need to be done on a yearly basis for a small company. I'd be grateful if people could review my list so far and either correct me where I am wrong or assist in suggestions for other things to be done.

• Fill in form CT41G to let HMRC know that I've started business activity.
• As the year goes on, keep updated accounts of all transactions
• Submit yearly accounts to both companies house and HMRC?

Now what I don't understand is, payments to myself, should I be classed as an employee of my own company or do I get payments as a director?

What tax if any do I pay on this money etc?

I've looked through the start up stuff on companies house website however I don't fully understand it.

At the moment I'm not in a financial position to appoint an accountant to do this work for me and the money coming in at the moment for the work is not beneficial to pay for an accountant.

 

[peteoc]

I've find the form which is needed yearly which is CT600 to submit yearly accounts. It states I need to submit statutory accounts with the CT600, what is classed as statutory accounts?

What is also classed as a signed set of accounts to companies house? Is this literally a hard copy physically signed?

 

The first question I would ask is why are you setting up a company, rather than being a sole trader.

There are various angles on this, however the one you are identifying is that a limited company requires a fairly high level of reporting, whereas a sole trader does not.

 

[peteoc]

I do agree that a sole trader is more appealing however due to my friend also doing work as well we'd be looking at setting up the ltd company.

 

How about a partnership?

The cost of getting it wrong in a limited company is constant and steep fines from various Government departments. These are enforced and are non-negotiable.

Bearing in mind your acknowledged inexperience here, I would strongly suggest that you take professional advice - which will almost certainly save you money in the long term.

I would also suggest that you have a partner / shareholder agreement!

 

[GraemeL]

Now what I don't understand is, payments to myself, should I be classed as an employee of my own company or do I get payments as a director?

What tax if any do I pay on this money etc?

If you set up a ltd company and you are a director, then regardless of payments HMRC regard you as an employee. Its up to you if you take a salary or not, but if you do you will have to comply with all PAYE regs etc. Of course you will pay no tax on the first £xxx etc. Normal rules.

Annually, you will pay corporation tax on all profits, at 21% (I think), but that's on the profit after salaries etc are paid. So is it better to take a salary or not?

If you take dividends there are additional tax rules.

And you have to submit annual accounts to Companies house, formatted in a particular way. Almost certain you don't have the skill to do that and will need an accountant.

That's why you need advice whether a Ltd co is best for you.

 

[peteoc]

would an LLP be better than an LTD?

 

[GraemeL]

Unless you have specific qualifications that you have not yet demonstrated, totally out of the question.

If you will not or cannot get proper advice, its very hard to see how you can do anything other than start as a sole trader or partnership (informal if you like). The minimum you will need to do is advise HMRC, keep some simple accounting records and complete an annual tax return. You can register a Ltd co at any time.

Why don't you try the library to look at books on starting a business?

 

[Truemanbrown]

Hi,

I'm trying to collate a list of items that need to be done on a yearly basis for a small company. I'd be grateful if people could review my list so far and either correct me where I am wrong or assist in suggestions for other things to be done.

• Fill in form CT41G to let HMRC know that I've started business activity.
• As the year goes on, keep updated accounts of all transactions
• Submit yearly accounts to both companies house and HMRC?

Now what I don't understand is, payments to myself, should I be classed as an employee of my own company or do I get payments as a director?

What tax if any do I pay on this money etc?

I've looked through the start up stuff on companies house website however I don't fully understand it.

At the moment I'm not in a financial position to appoint an accountant to do this work for me and the money coming in at the moment for the work is not beneficial to pay for an accountant.

If you have already decided to go the limited company route then there are a few things you need to do:-

a. set up a payroll scheme

The best way of drawing monies out of the company is by taking a salary of £7,072 (for 2011/12) and the rest of money by dividend.

Because you are a director, you are not subject to the national minimum wage regulations.

With a dividend, you can only draw out retained profits. Therefore, you will need to ensure that you have enough profits to ensure that the dividend is legal. And that means keeping up to date accounting records.

You should ensure that the paperwork concerning the dividend is kept up to date. You will need a voucher and a minute for each distribution!

b. VAT

You should keep a schedule showing turnover on a running 12 month basis. If your turnover goes over the registration threshold (currently £73k) during any 12 month period you should register for VAT!

c. Claimable expenses

You should learn about what other expenses you can claim such as mileage allowance and other travel expenses, mobile phones etc.

 

[jhardy2008]

You have also take permission for local government authorities for starting small business.

 

[GraemeL]

You have also take permission for local government authorities for starting small business.

Yes!!!!! You have done it again!

 

[MyAccountantOnline]

The first question I would ask is why are you setting up a company, rather than being a sole trader.

There are various angles on this, however the one you are identifying is that a limited company requires a fairly high level of reporting, whereas a sole trader does not.

I agree - if you are trading via a limited company I do think you do need support from an accountant. The accounting and tax requirements aren't easy and getting in wrong can be very expensive.

 

[MyAccountantOnline]

I've find the form which is needed yearly which is CT600 to submit yearly accounts. It states I need to submit statutory accounts with the CT600, what is classed as statutory accounts?

What is also classed as a signed set of accounts to companies house? Is this literally a hard copy physically signed?

Have a read here - Companies House

 

[MyAccountantOnline]

and here HMRC website